inside the customers mind

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  • Inside the customers mind: A framework for building profitable customer relationshipsNCDM Summer 2003Intensive Session July 28, 2003

    Dave HarkinsVP, Strategic ServicesThe Jackson Group

  • About todaySome lectureMostly interactive!Hands-on sessionApply your knowledge of your company, using a defined, repeatable framework to build better customer relationshipsThere much more to whats presented todayin the interest of time well be focusing on just a few key points

  • Todays GoalsStimulate your thinking about your company and its customer relationshipsProvide tools to help you plot a course of action for overcoming relationship-building challengesHelp you create relevant, hands-on examples to assist you in thinking through issuesOthers? You tell me

  • IntroductionWhat we need to get on the table up frontCultural IssuesWe think about the customer, but generally treat customers as numbers in the spreadsheet.Customer-centered thinking is at the core of all we doOkay, butWhat about channel conflicts?What about technology challenges?What about the data?What about the brand?

  • Everything you do is to get or keep customers. -Jack Welch, paraphrasedNews Flash!

  • Strong customer relationships begin by looking at your organization from the outside-in. -Dave Harkins

  • What does the customer think?Listening for the silent screams of customersDo you hate your customers?Do you make it hard for your customers to buy?Do you have absurd return policies?Do you have sales procedures (commissions, perks, etc.) that push products on customers, regardless of their needs? Are your business operations or structure transparent to the customer?Do your customers get lost in voice-mail hell when they call?Do your customer have to talk to more than 2 people because your structure doesnt allow front-line employees to solve customer problems?

  • What customers really want from youValue for price paidSolve my problems and/or make my life easierStop making it hard for me to be your customerGet rid of things that dont matter to me or make my life more complicatedKeep me informedListen to what I say (and make me say it only once)Show me how sharing my personal information will be of benefit to meShow me you careBe sincere and trustworthyQuit asking me if I like youRemember that I pay your bills

  • Putting the customer firstHow you can contribute to a customer-first cultureEnsure that everything you do is done by first looking from the outside-inHow will the customer view what youre doing?Will it satisfy the holy grail of customer wants?Create a sustainable relationship using a methodical, easy-to-understand frameworkUnderstanding the customerDeveloping a relationshipSelling through the relationshipFulfilling your obligations in the relationshipKeep the promises you make

  • Building a framework to deliver Profitable Customer Relationships

  • It starts with a PromiseThe customer has expectations of their interactions based on some external factorsThink of this like datingGet to know and understand the other personDevelop the relationship by sharing and interactingSell yourself and your value as someone with which to spend timeFulfill your obligations to make the relationship workIts workIts a never ending cycleYou win some, you loose some, but you never really fail if you learn something each time you go through the process

  • The Customer Relationship ProcessDefinition: What the customer experiences or believes he/she will experience when interacting with a company.We call the value delivered or implied: The Customer Promise

  • Types of PromisesInstitutional Broader, brand-oriented promisesGenerally implied promisesDifficult to measureOften deployed through taglines Can be presented as part of the corporate mission or in customer service statementsInteractiveDirectly statedTangible, tacticalActionable by employeesOften made up on the spot Can be any promise made by an employee, regardless of fit with the institutional promise

  • Customer Promise ExamplesA few implied, institutional promises presented through taglines Youre in good handsYeah, weve got that.Like a good neighborHave it your wayYou can do it, we can helpHow can these promises be consistently delivered?

    The Promise is delivered using a repeatable process we call: The Customer Promise Framework

  • Framework Objectives Provide the understanding of the customers (and prospective customers) Needs, Values and Expectations (NVEs) to put the human element back into the processProvide the foundation for relationship-building with customer and prospective customersProvide a process for how best engage the total organization in the customers experienceDetermine how to leverage NVEs to build sustainable customer relationships

  • Framework ImportanceAllows for a better understanding customer (and prospective customer) Needs, Values, and Expectations (NVEs) allow an organization to deliver higher value products and services, and build stronger relationshipsStronger relationships allow an organization to leverage additional sales opportunitiesAdditional opportunities result in revenue growthREMEMBER: Everything you do is to get or keep customers (in other words, its about SALES)

  • Develop the relationship by providing relevant value in:Product/service offeringsPricing strategiesDistributionPromotion/AdvertisingUnderstand the customer with analysis of:NVEsTransaction activity

    Sell using the relationship with:Targeted acquisition effortsDirect, F2F salesLoyalty and continuity programs

    Fulfill your obligations to the relationship through:Customer serviceFrontline supportProduct/Service Delivery

    The Customer Promise FrameworkThe Customer Promise Framework

  • Step 1: Understanding the Customer

  • Understanding the CustomerAll data and information play a part, but we tend to look too much at the numbersPromotion HistoryResponse HistoryPurchase TransactionsPredictive modelsDemographics, lifestyle, overlays, etc.We need to also look at the human elementEvaluating Customer Needs, Values and Expectations or NVEs help to put the human element into the equation

  • It begins with customer NVEsWhat are customer NVEs?Needs: Basic human needs (like food, clothing, shelter) or core needs, as well as variable needs to solve a specific problem at handValues: Combines the customers values (integrity, honesty, etc.) with what he or she deems to be important in the relationship with your organization (comfort, security, stability, friendliness, etc.)Expectations: What the customer expects from his or her interactions with your company based either on past experiences or on the Customer Promise that youve presentedyour brand identity.How well do customers NVEs align to a companys perspective of itself? Lets look at a retail example

  • Aligning NVEs to Corporate Perspective5 = Excellent 1 = Poor

    Alignment Variance:0 = Excellent1-2 = Good (Caution Areas)3+ = Poor (Problem Areas)Retail Operation

    Chart1

    55

    24

    25

    24

    33

    34

    15

    44

    34

    25

    24

    Customer View

    Company View

    NVE Mapping

    Sheet1

    CustomerCustomer ViewCompany ViewVariance

    Product/Service Value550

    Solved problems242

    Easy to do business253

    No "noise" in the process242

    Information that's relevant330

    Exceptional service341

    Benefits for personal information154

    Value as a customer/person440

    Sincerity341

    Lack of inferiority complex253

    Control242

    Sheet2

    Sheet3

  • Aligning NVEs to Corporate Perspective

    Chart1

    55

    24

    25

    24

    33

    34

    15

    44

    34

    25

    24

    Customer View

    Company View

    Sheet1

    CustomerCustomer ViewCompany View

    Product/Service Value55

    Solved problems24

    Easy to do business25

    No "noise" in the process24

    Information that's relevant33

    Exceptional service34

    Benefits for personal information15

    Value as a customer/person44

    Sincerity34

    Lack of inferiority complex25

    Control24

    Sheet2

    Sheet3

  • How does your company measure up?Do you knowYour customers NVEs?How do well do you think your company aligns to your customers NVEs?Looking from the outside-in, would your customer agree?In reality, how does who you are (and what you look like) align with customer NVEs?Where the area of convergence between what you say and how you act?Do you meet expectations every time?How do NVEs impact your customer interactions?

  • Understanding the customerExercises (20 Minutes)Pick two customer segments, define NVEsIdentify your organizations key strengths from a customer perspective, relative to the NVEs (use a scale of 1-5 with 5 being Excellent and 1 being PoorVariance in alignment of 0 = Excellent; 1-2 = Good; 3+= PoorMap and evaluate alignmentWhat are you going to do to gain greater alignment in weaker areas?How will you prioritize the order of work to be done?

  • Step 2: Developing the Relationship

  • Developing the relationshipThe key to developing a relationship is anticipating and providing for customer needs and expectationsWhen, how and why a purchase is made (or planned) is critical for developing product, market, and customer strategyWhats provided (product or services) must be relevant and timely to the customerUnderstanding how the customers purchase decision process is almost as important as NVEs in building the relationship

  • Developing the relationshipUnderstand how the customer buysProvides key knowledge to map with NVEs to develop product, price, distribution and promotion for customer segmentsPurchase Decision Cycle provides a guideAll customers have a decision process for buyingFor the most part, everyone follows the same patternIts driven by a combination of needs, that are often identifiable by internal and sometimes external triggersTriggers are the key to understanding where a customer is in the buying cycle so you can determine how to best meet his/her NVEs in the process

  • Defining the Purchase Decision CycleCustomer has a need created by internal or external forces

    Change brings discontent

    Need becomes firmly established

    Customers seek to understand options

    Compare alternatives

    Identify preference

    Value and expectations are setCustomer determines which products, services and companies best meet his/her needs, values and expectations

    Makes purchaseCustomer forms opinion of product, service, company relative to NVEs

    Develops relationship (or not) based on that value

    Repeats the processConcept Source: Getting Into Your Customers Head, by Kevin Davis

  • Visible internal trigger examplesNeedLearnBuyValueAutomobile Dealership

  • Leveraging the triggersIf you know the customer NVEs and know the triggers in the purchase decision cycle, you couldTailor communication to facilitate faster decision makingAnticipate and answer questions before askedSell against competitive products/servicesProvide more relevant informationBetter demonstrate your knowledge of the customerYou dont have to begin at the beginning to take advantage of the process

  • Developing the RelationshipExercises (20 Minutes)Define and map The Purchase Decision Cycle for your two segmentsIdentify key internal trigger pointsDetermine what actions you could take with this new information

  • Step 3: Selling the Relationship

  • Selling through the RelationshipSelling through the Relationship is a process that builds company value through sustained, relevant interactions with the customerBoth the customer and the company have invested time to understand each others NVEs and believe that mutual benefit is gained through sustaining the relationshipSpecifically:The company has consistently met customer needs and expectationsThe company delivers on whats important to the customerThe customer sees a relationship rather than a business transactionThe customer believes that the company is deserving of ongoing support

  • Selling through the RelationshipNVEs and the Purchase Decision Cycle allow you to better position your products or services to the right customer, at the right time, reduce operational costs, and create sustained value.Can reduce overall marketing and sales costs because your efforts are more targetedWill increase sales because your offerings are more relevantSolidifies your relationship as a company that understands and acts on its customers NVEsThe relationship becomes established with a purchase (or re-purchase) and your company gains a valued provider status

  • Relationship Selling Program StrategiesContinuity of ContactRewardsRebateAppreciationPartnershipAffinityCommunity/Philanthropy

  • Relationship Selling Program StrategiesContinuity of ContactCan be used to drive acquisition offersEncourages new customer to create a new relationship or deepen an existing relationship by creating incentives for repeat businessNot generally used as a loyalty programLow riskRelatively low costHighly flexible

  • Relationship Selling Program StrategiesContinuity of ContactDefinition: Special offers, value-added benefits to customersUse it when:Your primary goal is both to acquire and retain customersWill require different programs for eachYou want to motivate new incremental purchasesYou want to increase specific channel trafficExample:Lenscrafters Event driven continuity program offering reminders to schedule visits, expiration of contact prescription, birthday discounts

  • Relationship Selling Program StrategiesRewards Leverages a customers interest in an idea or concept that has nothing to do with the brandRewarding a customer's behavior with merchandise unrelated to the brandCustomers become emotionally involved in the programCan serve double-duty as an acquisition programIf prospective customer sees no differentiation between your brand and another, then merchandise rewards may sway purchase decision

  • Relationship Selling Program StrategiesRewards Definition: Awards points for purchases. Points can be exchanged for rewards unrelated to the brandUse it when: You offer limited options for rewarding customers with additional products or services You want your program to serve double-duty as a new customer acquisition device. You need to differentiate your brand from your competitors' brandsExample:AT&TOffers reward program for using X dollars per quarter. Rewards are generally $10 purchase card chosen from a variety of merchants

  • Relationship Selling Program StrategiesRebateSimplest form of value exchange, most prevalently used by retailersSupports the brand and the buying habits of the highest value customers by giving them more of what they like A tool to increase traffic and incremental sales without reducing perceived brand image

  • Relationship Selling Program StrategiesRebate Definition: Awards a gift certificate, redeemable against new purchases, when a customer reaches a spending thresholdUse it when:Product or service lines represents a wide selectionDesire to motivate new incremental purchasesWant to increase channel trafficExample:BordersChildrens book club that provides a $5 rebate for every 10 childrens books purchased

  • Relationship Selling Program StrategiesAppreciationSimilar to the rewards program, with rewards based on the brand rather than on unrelated offeringsIncrease lifetime value among current customersIf customers are asked whether they prefer rewards or cash, they'll always take the cashBut in giving your customers cash, you could diminish the value of your brand

  • Relationship Selling Program StrategiesAppreciationDefinition:Offers a reward selection of your companys merchandise in exchange for accumulated pointsUse it when:Your goal is solely to increase customer lifetime value, not acquire new customersYou want your customers to sample other products or servicesExample:BlockbusterGold Rewards program provided to members renting over X number of movies per year. Free rental for every 5 rented per month; free Blockbuster Favorites (non-new releases) Monday-Thursday.

  • Relationship Selling Program StrategiesPartnershipDesigned primarily to acquire new customers and then to reward them for additional purchasesActively seek new customers with a specific interest in a partner's product, and rewards those customers with more of the productOnly the partner's customers are aware of the offer

  • Relationship Selling Program StrategiesPartnershipDefinition: Rewards a customers accumulated purchases or points with a partner company's products or services (discounts or free)Use it When:Your primary goal is to acquire new customers You have the opportunity to prospect a partner company's databaseThe partner companys customers are likely prospects for your loyalty programExample:FTDPartners with airlines to offer discounts on flowers for frequent flyer programs.

  • Relationship Selling Program StrategiesAffinityIncrease the lifetime value of customers by building strong relationships with them, without the use of rewardsValue is added to customer relationships through information-intensive communications, value-added benefits and recognitionApplicable only where the brand represents a strong lifestyleSuccess may be more difficult to measure

  • Relationship Selling Program StrategiesAffinity Definition:Offers special communications, value-added benefits and recognition to valued customersUse it when:Your brand strongly represents a specific customer lifestyle Your customers are generally interested in learning more about your products or services Rewards are not needed to cultivate long-lasting interactive relationshipsExample:State FarmAgents provide ongoing newsletters, return mailing labels, birthday cards, etc.

  • Relationship Selling Program StrategiesCommunity/PhilanthropyUse rewards to enhance value proposition, as well as brand core philosophyValue is added to the customer relationships through the good feeling associated with contribution to a causeIdeally applied to companies with long-established, well-known community/philanthropic platformsCan sway a prospect to purchase

  • Relationship Selling Program StrategiesCommunity/PhilanthropyDefinition: Reward a customers purchases with a donation to community or philanthropic causeUse it when:Your brand strongly represents a known philosophy Your customers support the brand philosophySmaller reward for high perceived value is necessaryRewards are not needed to cultivate long-lasting relationshipsExample:Third-party phone company whos name I cant rememberDonates a portion of your monthly bill to a cause of your specification (chosen from a provided list)

  • Choose CurrencyCarefullyPointsLiability and exposureSpoilageRestrictions and rules for redemptionDiscount / RebateBrand devaluationEffect on marginEffectively paying current customersAdded valueDeliver on promises

  • Best Practices in Relationship SellingWhat Doesnt WorkChannel specific/single channelCookie-cutter messagingTalking to the customerDesigned for companyCompany-valued rewardsAutomated customer contactCustomer service rhetoric from the topWhat WorksChannel-neutral, but multipleCustomized messagingCommunicating with the customerDesigned for customerCustomer-valued rewardsFace timeCustomer service from the ground up

  • Selling through the RelationshipExercises (20 Minutes)Using the NVEs and purchase decision cycle as a guide, determine which program strategy would work best for each of your segments.Explain why you choose the program strategyDetermine the currency you would use and why Define the benefits you would offer your customersDoes it measure up to the best practices?

  • Step 4: Fulfilling the Relationship

  • Fulfilling the relationshipKeeping the relationship going is the hard partHow do you fulfill customer expectations and promises after the sale?Are all parts of the company focused on the same goal for meeting customer expectations?Do you have ongoing education and training programs to ensure that customer value is?Continuous improvement is paramountWhat do you learn at each interaction that you can use the next time through the framework?How can you apply what you learn to improve your value to customers?Managing interaction points are key

  • Customer Interaction MapComputer Store (computer purchase)

    Sheet1

    Interaction reasonsRetail StoreWebsiteTele-Customer ServiceTech SupportCredit

    Learning about productsXX?

    PurchaseX??

    Setup??X

    Questions about operation???X

    Problems related to operation?X

    Questions about a bill?X

    Returns??X?

    Sheet2

    Sheet3

  • Customer Interaction PointsHow many points of interaction does the customer have with your company?What are these points?When do they occur?What messages are being put forth (from the customers perspective)?Are the messages consistent with your Customer Promise?Whos ensuring this consistency?

  • Fulfilling the relationshipExercises (20 minutes)Determine the interactions your two customer segments will have, based on their NVEsCreate a Customer Interaction Map for eachHow will you determine the consistency in meeting customer expectations at each point of contact?

  • Key points to rememberThink from the outside-in (look at everything from the customers viewpoint)Customers have needs, values and expectations of their interactions with your companyknow them and understand how they impact the relationshipSelling through relationships requires both and understanding of the customer and knowledge of how he/she buysRelationships arent built with a single purchasetheyre developed over time when both parties see mutual benefitsLong-term customer relationships are a result of continuous fulfillment of the customers Needs, Value and Expectations (keep the human factor)

  • Key points to rememberDevelop the RelationshipSell through theRelationshipFulfill the RelationshipUnderstand the Customer

  • Questions?Dave HarkinsVP, Strategic ServicesThe Jackson Group1.800.JACKSON x3374803.548.4172 (direct line)[email protected] | www.jacksongroup.com

    This presentation will be available for download from our website at: www.jacksongroup.com/presentations

    Not really managing the relationship, but managing the promise made to customers. I